Sorry i would like to make correction on my previous post the latest gearing ratio for UOA should be 39% not 43%.

Refer to UOA ANNUAL REPORT, the average interest for borrowings is 3%. Base on my calculation on the properties yield which is around 8% with respect to latest valuation. It still provides a lot of margin. Lets assume this interest rate rise to 4% within the next 3 years we still have quite a number of margin for that. So i am quite comfortable with UOA NEW acquisition. Base on my own calculation after deducting of the interest expenses the project EPS shoud be at least 16 cents per unit!!!!!!

So for me i will hentam UOA REITS KAO KAO

Of course i did include the dilution and even the extra interest expenses UOA needed to pay in future and considering the extra interest hike of another 0.5 % even.

Of course if you guys look from the private placement of course the future EPS does not change much. But don forget the RM 270million loan which was raised through borrowings with interest rates of around 3.5% in future (last year borrowings interest was 3% we add another 0.5% for future interest rates hike). So as i said previously the margin is quite high. So in short leveraging is very important in managing reits

This post has been edited by darkknight81: Mar 21 2010, 06:17 PM

My copy of analysis but quite messy haven't tidy up yet.

Actually through leveraging you can see increase in EPS but risk is there. As long as the interest rates and occupancy rates risk is manageable it should be alright. Imagine with additional RM 270 MILLION LOAN at 3.5% interest rates but with yield of around 8% don you think it is possible? Thats why reits EPS can be improve via acquisition or improve in occupancy rates. Correct me if wrong sifus.

This post has been edited by darkknight81: Mar 21 2010, 06:38 PM


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I get what you meant. Thats y i am saying the dividend should be 16 cents in my previous post (you can refer it back) after deducting all these expenses but in my calculation is actually 17 cents as per attached which is the ideal case. I am lazy to take these exact figures into considerations but i understand what you guys meant so i already deducted 1 cents out from it. I am not an analyst i just want a rough estimations. Eventhough you are analyst you also cannot get the exact figures as occupancy rates do determined the overall returns.

For you guys saying is easy but it took time to compile all this figures so i got to make some assumption on this and that. . Even for the interest rates part i assume it to be 3.5% this year but in actual fact it is 3.25 at the moment.

If you really read their annual report you can see the EPS growth for the past few years. So who say reits don have growth? Its all depends on how you manage it.

Thats why i put a lot of "ASSUME" as this is just a rought estimations. I did not get paid for all these .

As i said earlier, leveraging is very important in reits... The margin between the properties yield and interest rates play a very important role. So i believe it is the right time for UOAREITS to acquire two building blocks before the interest rates raise further. The margin is around 4% and with RM 270 Million loan... it is around RM10.8 million extra you see.

Actually no need to calculate much from here we already know the effect on future EPS. Those with some basic in math can calculate this out.

Total new units after private placements is 422871776. So RM 10,800,000/422,871,776 = 0.025 CENTS extra here. Previous EPS is around 12 cents. So including this 2.5 cents should be added up to 14.5 cents.

But this all depends on UOA REITS TOO, maybe they want to allocate more money to pay off their borrowings.

NOTE : Current borrowings interest is only 3.25 i am assuming 4% interest and properties yield i am assuming 8% here which is quite fair. So there are margin here in actual fact it should be more than 10.8 million.

This post has been edited by darkknight81: Mar 22 2010, 08:28 AM

UOAREITS still no sellers at the moment

Want to buy some more also susah

This post has been edited by darkknight81: Mar 22 2010, 11:21 AM

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Added on March 22, 2010, 1:28 pmSifu Jordy,

You missed out the contribution from the private placement….Thats why your earnings per unit so low…Let me explain to you more clearly. Is my fault of not explaining properly.

245,948,700 units = (EPS 12 CENTS for 2010) = 29.51 Milliion
RM 230 million raise through private placement ( 176923076 new units) assuming yield of 8% (after deducting all the expenses ) = RM 18.4 MILLION.
RM 270 Million through borrowings at 3.5% interest rates (Assuming yield of 8%) that’s means margin of 4.5% = 12.14 Million
EPU = RM 60 Million / (422871776) = 0.14 CENTS.

In conclusion acquisition will definitely increase future yield with 1 condition below:

1. Acquired properties yield must be higher than interest rates and almost equal with current yielding.

I don think i need to explain further on these. Simple maths will do.

This post has been edited by darkknight81: Mar 22 2010, 01:36 PM

Yes i admitted my previous figure seems too optimistic however i am not agree on your previous post stated the EPU before and after acquisition are equal.

The 1 cents deducted from the 17 cents net rental was really not enough as we need to deduct property operating expenses + Manager's fees + trustee's fees etc and even tax. But i believe these two blocks of building are quite new so the maintenance cost should be quite low.

This post has been edited by darkknight81: Mar 23 2010, 07:58 AM

Me too and i am from east malaysia some more. This figures i get it from internet too. I think Master Cherroy can explain on this.

Thanks Jordy. I think the idea behind reits is "ALMOST" same as we buy a house for investment. We loan through bank and collect monthly payment to repay the debts. In the end we owned the house. It will took few decades to settle the loan same goes for reits.
The yield will improve in future as due to below factors:

1. Increase in rental rates.
2. Reduce in interest payment.


This post has been edited by darkknight81: Mar 23 2010, 01:10 PM

Yup. Thats why i have factored in by assuming the interest at 3.5% for this year.

Base on their 2009 annual report. It is 3%. Of course i do agree with you guys on the risk of interest hike in future to maybe 7 or 8% also possible. Its all depends on how UOA manage it. For me i will reduce the dividend payout to maybe 7 to 8% yield and allocate more fund to reduce the loan especially when the interest are still low.

This post has been edited by darkknight81: Mar 24 2010, 08:08 AM

So far how is the interest rates for "ALL REITS" From what i know UOA REITS INTEREST RATES IS 3%. How about AXREIT, ATRIUM AND QCAPITA? You are heavily invested into these 3 counters from what i know.

This post has been edited by darkknight81: Mar 24 2010, 11:11 AM

Leveraging as i have mentioned before. Borrowing at lower rates to get higher returns in terms of properties yield.

UOA REITS also have its weakness as 100% of its properties are acquired from its mother company so i don think the price are really fair compare with other reits as they can buy up undervalued properties which the owners want to dispose desperately.

Yup simple math will do actually provided the occupancy rates can be improved or at least sustain and finally make sure interest rates does not surge to sky high like 1998. Very easy to monitor i like this type of investment.

This post has been edited by darkknight81: Mar 24 2010, 03:39 PM

Starhill gearing very low Lots of room for leveraging

Now i know why Master Cherroy pick up starhill liaw.

This post has been edited by darkknight81: Mar 24 2010, 05:21 PM

Borrowings for UOA (UNITED OVERSEA AUSTRALIA) reits are term as revolving credit which they have to choice to decide how much they are going to pay on that particular month.

The way they calculate their interest are base on

A% + COF.

COF (COST OF FUND) will vary from time to time.

This post has been edited by darkknight81: Mar 25 2010, 08:14 AM

Should be base on their NAV

What type of surprise are you expecting?

I am quite surprise that the price still can maintain around 88 cents since its yield are much more lower compare with other reits.

Personally, i prefer capital mall trust than sunreit.

Hektar yield more than 9% ?